AI
Wednesday, February 20, 2008 7:32:05 PM
Market Update 080220
http://biz.yahoo.com/mu/update.html
4:25 pm : Readers may recall that the stock market flip-flopped on Tuesday, rallying in the early-going and then selling off into the close. On Wednesday it was just the opposite. Stocks languished in the early-going amid concerns about credit market liquidity and a worse-than-expected January CPI report, but eventually turned things around and advanced in the afternoon trade.
The performance was remarkable as there seemed to be some legitimate reasons for participants to assume a bearish view of matters and to maintain that view throughout the session.
News that KKR Financial Holdings, the publicly traded credit fund of Kohlberg Kravis Roberts & Co., had delayed repayment of its asset-backed commercial paper debt for a second time, and was involved in restructuring talks with creditors, sparked concerns about liquidity in the credit market that took a heavy toll on foreign markets.
This news, however, soon took a backseat to the CPI report, which revealed a 0.4% increase in total CPI for January and a 0.3% increase in core-CPI, which excludes food and energy. Both numbers were slightly ahead of expectations that called for increases of 0.3% and 0.2%, yet the year-over-year increases of 4.3% and 2.5%, respectively, are what really grabbed the market's attention.
The initial reaction was understandably negative as the report fueled inflation concerns and suggested the FOMC might not be as aggressive with future rate cuts as had been previously anticipated.
On a related note, the FOMC Minutes from the January 29-30 meeting indicated that members felt inflation expectations would remain reasonably well anchored. Still, it was not lost on the market, which saw oil prices top $100 again in Wednesday's trading, that the Fed raised its core inflation forecast for 2008 to 2.0% to 2.2% from 1.7% to 1.9%. The Fed also cut its 2008 GDP forecast to 1.3% to 2.0% from 1.8% to 2.5%.
The takeaway for the market was that the updated forecasts continue to support the view that further rate cuts remain likely. Accordingly, the stock market pressed higher following the release of the minutes.
In a separate release, it was reported that Housing Starts rose 0.8% in January. That seemingly good news was offset by the realization that starts had dropped 21% over the prior two quarters and that building permits slipped 3.0% to a 16-year low of 1.04 million units on an annualized basis.
After digesting the economic data, the stock market found a bullish stride that was helped along by the outperformance of the financial and technology sectors, which rose 1.6% and 1.7%. At the same time, the lack of follow through selling pressure after the negative open led to some bargain hunting activity that, in turn, forced some short covering that aided in the market's turnaround.
Other leading sectors included energy, which gained 1.5%, and basic materials, which jumped 1.2%.
Dow component Hewlett-Packard (HPQ 47.44, +3.49) provided its fair share of support for the broader market as it got a healthy 8.0% boost following its better than expected fiscal first quarter earnings report and full-year outlook. Its good news trickled down to other tech stocks that resulted in technology being the best-performing sector on the day.
Telecom services remained a drag, however, as it slipped 2.9%. Verizon (VZ 35.24, -0.10) and AT&T (T 34.36, -1.53) led the retreat, having been hit by a Credit Suisse downgrade of both stocks to Neutral from Outperform.
Strikingly, the defensive-oriented sectors consumer staples, health care and utilities underperformed today in a trade that was driven by more growth-oriented issues.DJ30 +90.04 NASDAQ +20.90 NQ100 +1.3% R2K +1.1% SOX +2.7% SP400 +1.4% SP500 +11.25 NASDAQ Dec/Adv/Vol 1249/1696/2.29 bln NYSE Dec/Adv/Vol 1198/1936/1.43 bln
3:30 pm : Stocks retreat off their best levels, but continue to hold onto decent gains as we head into the final half-hour of trade. Gold futures are rallying in electronic trading, now up 1.4%, or $12.90, to $943.00 per ounce.
St. Louis Fed President Poole said the January CPI numbers creeped in the wrong direction, but are not galloping, according to Reuters.DJ30 +70.44 NASDAQ +14.84 SP500 +8.35 NASDAQ Dec/Adv/Vol 1317/1581/1.96 bln NYSE Dec/Adv/Vol 1283/1814/1.19 bln
3:00 pm : Stocks spike to fresh session highs with the major indices posting gains of at least 1.0% for the day. Eight of the ten sectors are in positive territory. Financials (+1.8%) and tech (+1.8%) are neck and neck for the top spot. Only telecom (-2.0%) and healthcare (-0.2%) remain in the red.
The Dow is now up 1.9%, or 232 points, from its session low.DJ30 +124.47 NASDAQ +24.93 SP500 +14.74 NASDAQ Dec/Adv/Vol 1233/1634/1.77 bln NYSE Dec/Adv/Vol 1176/1913/1.07 bln
2:25 pm : Stocks trade in a choppy manner, but remain in the green, following the release of the Jan. 30 minutes, which included the minutes from the emergency Jan. 21 meeting and a Jan. 9 conference call. The Fed lowered its outlook for the economy, while raising its outlook on inflation. Meanwhile, crude has spiked higher, hitting an all-time high of $101.32 per barrel.
In the FOMC Minutes, the Fed said that participants agreed inflation data since the December meeting had been "disappointing", but that slow growth should relieve some of the pressures. The Fed raised its core inflation forecast for 2008 to 2.0% -2.2% from 1.7%-1.9%. The Fed lowered its 2008 GDP forecast to 1.3%-2.0% from 1.8%-2.5% and raised its unemployment rate expectation to 5.2%-5.3% from 4.8%-4.9%.
Fisher dissented as he felt the decision to ease by 75 basis points just one week earlier, which brought the total easing to 175 basis points since September, was enough stimulus in the face of the more than 3% headline inflation. Of note, Fisher did support the emergency 75 basis point cut on Jan. 21. DJ30 +33.78 NASDAQ +8.73 SP500 +4.11 NASDAQ Dec/Adv/Vol 1418/1434/1.62 bln NYSE Dec/Adv/Vol 1501/1582/964 mln
2:00 pm : The major indices climb back toward their session highs, as telecom (-2.7%) attempts to recover. Verizon (VZ 34.98, -0.36) has had a nice bounce off its worst level, when it was down as much as 5.8%. AT&T (T 34.45, -1.44) has also regained some ground, but continues to post a steep decline.
In St. Louis Fed President Poole's prepared speech, he said the "recent relatively small increases in inflation are apparently due to transitory factors and not to changes in inflation expectations." Poole expects "substantial stability of inflation expectation." His view that recent increases in inflation are transitory may help offset some disappointment regarding today's higher than expected CPI reading. However, Poole is retiring and will not attend the next FOMC meeting on March 18, and therefore his comments hold less weight.DJ30 +43.80 NASDAQ +13.44 SP500 +5.61 NASDAQ Dec/Adv/Vol 1324/1513/1.44 bln NYSE Dec/Adv/Vol 1378/1704/837 mln
1:30 pm : In the past half-hour, the major indices climb to fresh highs and then retreat to slightly above the unchanged mark. Financials (+0.9%) and tech (+1.0%) have been battling it out for the leader spot. Meanwhile, telecom (-3.6%) is still posting a steep decline, but is well of its lows when it was down more than 5.5%.
Gold continues to make gains as it hits session highs. Gold is up $5.00 to $934.70 per ounce, its highest level since late January. Commodities as a whole are down a slight 0.1%. DJ30 +16.80 NASDAQ +4.70 SP500 +2.76 NASDAQ Dec/Adv/Vol 1408/1420/1.32 bln NYSE Dec/Adv/Vol 1514/1560/764 mln
1:05 pm : The major indices are off their best levels as they trade slightly above the unchanged mark. Crude oil is hovering around the $100 mark after retreating a bit from its all-time high.
Advancers narrowly outpace decliners on the NYSE and Nasdaq. New 52-week lows outpace new highs by nearly 2-to-1 on the NYSE and by a steeper 15-to-1 on the Nasdaq.DJ30 +7.98 NASDAQ +6.02 SP500 +2.07 NASDAQ Dec/Adv/Vol 1377/1415/1.20 bln NYSE Dec/Adv/Vol 1462/1578/694 mln
12:35 pm : The major indices bounce into positive territory. Five of the ten sectors are now in the green, with notable strength in financials (+1.3%) and tech (+1.3%).
Crude oil spiked into positive territory, hitting a fresh all-time high of $100.40 per barrel. Crude has retreated a bit, trading down 0.1% to $99.87 per barrel. The weekly energy statistics are delayed a day to Thursday, due to the federal holiday on Monday. DJ30 +20.13 NASDAQ +7.83 SP500 +3.20 NASDAQ Dec/Adv/Vol 1336/1427/1.12 bln NYSE Dec/Adv/Vol 1446/1587/646 mln
12:00 pm : The major indices are off their worst levels, but remain in negative territory. The session's bearish bias is being fueled by a higher than expected inflation report.
January CPI rose 0.4% month-over-month, slightly higher than the expected rise of 0.3%. Core CPI, which excludes volatile energy and food prices, rose 0.3%, also topping the consensus estimate that called for a rise of 0.2%.
This leaves CPI up 4.3% year-over-year, and core CPI up 2.5%. Gains were seen in food, energy, medical care costs, PCs and tobacco. The data will spur more inflation concerns. Briefing.com believes that the slow economic growth will help ease inflation, although it is clear this report is negative for the stock market.
In other economic news, January housing starts and building permits were roughly in-line with estimates.
KKR Financial Holdings (KFN 14.16, -0.36), a unit of Kohlberg Kravis Roberts, has delayed repaying its asset-backed commercial paper for the second time. Bloomberg.com reports the firm is in restructuring talks with its creditors. Despite the report, financials (flat) are managing to outperform on a relative basis, thanks to strength in investment banks & brokerages (+1.6%).
Telecom (-5.4%) is again posting a steep decline. Dow components AT&T (T 33.59, -2.30) and Verizon (VZ 33.71, -1.63) are getting clipped after being downgraded to Neutral from Outperform at Credit Suisse. Yesterday, the sector dropped 5% on news that AT&T and Verizon are offering unlimited wireless plans for $99.99. Analysts fear this could be the start of a telecom war that could crimp profits. The companies are the main laggards in the S&P 500.
Helping to offset some selling pressure is a bullish earnings report and outlook from Dow component Hewlett-Packard (HPQ 47.22, +3.27). Its shares are up 7.4% after the company reported earnings of $0.86 per share, excluding items, topping the First Call consensus estimate by $0.05. It also issued upside guidance for the second quarter and the full year. The company noted that 69% of its sales come from outside the United States. It is the best performing stock in the S&P 500 this session. As a result, tech is the best performing sector, with a 0.5% advance.
Retailers (+1.2%) are a standout this session due to positive fourth quarter results from off-price retailer TJX Companies (TJX 31.42, +1.69).
The FOMC minutes for the Jan. 30 meeting are set for release at 2:00 ET. The Fed cut rates by 50 basis points to 3.00% at the meeting; however, Dallas Fed President Richard Fisher dissented, preferring no change. The minutes should help clarify the FOMC's decision and Fisher's decision to dissent. In a Feb. 7 speech, Fisher indicated that inflation concerns spurred his desire to leave rates unchanged.
Crude oil has eased 0.7% to $99.24 after rallying yesterday to a new all-time intraday and closing high.DJ30 -71.56 NASDAQ -9.23 R2K -0.3% SP500 -6.85 NASDAQ Dec/Adv/Vol 1568/1145/880 mln NYSE Dec/Adv/Vol 1855/1134/503 mln
11:30 am : The major indices continue to fluctuate in negative territory, and are currently trading near their best levels of the session. There is some relative strength within financials (+0.3%), which has rebounded into positive territory.
Within the sector, 11 of the 18 groups are trending higher. Investment banks & brokerages (+2.0%) are leading the way, with strength in Goldman Sachs (GS 177.58, +3.78), Bear Stearns (BSC 81.84, +1.82), and Lehman Brothers (LEH 55.32, +1.75).DJ30 -64.32 NASDAQ -6.31 SP500 -5.86 NASDAQ Dec/Adv/Vol 1528/1163/764 mln NYSE Dec/Adv/Vol 1832/1128/433 mln
11:00 am : The major indices remain in the red, with only the tech sector (+0.3%) in positive territory. Energy (-0.1%) is outperforming on a relative basis, despite a 1.1% slide in crude oil prices. Crude is down on some profit-taking, after hitting an all-time intraday high and an all-time closing high yesterday.
Dow component Hewlett-Packard (HPQ 47.07, +3.12) is posting an impressive advance of 7%. The company reported earnings of $0.86 per share, excluding items, topping the First Call consensus estimate by $0.05. It also issued upside guidance for the second quarter and the full year. The company noted that 69% of its sales come from outside the United States. It is the best performing stock in the S&P 500 this sessionDJ30 -74.74 NASDAQ -9.16 SP500 -7.71 NASDAQ Dec/Adv/Vol 1603/1005/624 mln NYSE Dec/Adv/Vol 1963/960/354 mln
10:30 am : The major indices climb off their worst levels and as the major indices trade with modest losses. Strength in retailers and tech (+0.6%) are providing a lift to the broader market.
Retailers (+1.0%) are outperforming the broader market, as they post a decent gain. Their strength this session is being fueled by positive fourth quarter results from TJX Companies (TJX 30.77, +1.04). The off-price apparel retailer reported earnings of $0.64 per share, topping the consensus estimate of $0.63. The company did issue mixed guidance, projecting lower earnings than expected for the current fiscal quarter, but issuing full year guidance above expectations.DJ30 -72.95 NASDAQ -5.30 SP500 -6.96 NASDAQ Dec/Adv/Vol 1559/976/447 mln NYSE Dec/Adv/Vol 1946/894/250 mln
10:00 am : After a failed recovery attempt the major indices fall back toward their opening lows. Nine of the ten sectors are in the red, with only tech (+0.4%) managing to post a modest gain.
Telecom (-4.0%) is again the main laggard. Yesterday the sector shed 5% after Verizon (VZ 33.94, -1.40) and AT&T (T 33.89, -2.00) announced an unlimited wireless plan for $99.99 a month. The stocks are again under pressure this session after being downgraded to Neutral from Outperform at Credit Suisse. DJ30 -81.82 NASDAQ -9.87 SP500 -9.33 NASDAQ Dec/Adv/Vol 1456/930/259 mln NYSE Dec/Adv/Vol 1987/768/153 mln
09:40 am : Stocks open on a low note, fueled by liquidity and inflation concerns.
Regarding inflation, January CPI rose 0.4% month-over-month, higher than the expected reading of 0.3%. Core CPI, which excludes volatile energy and food prices, rose 0.3%, which was also higher than the expected 0.2% rise.
The CPI reading weighed on sentiment, which was already weak due to a delayed repayment of asset-backed commercial paper from KKR Financial Holdings (KFN), a unit of Kohlberg Kravis Roberts & Co. Bloomberg.com reports KKR Financial is involved in restructuring talks with its creditors.
There are some bright spots this morning. Both Hewlett-Packard (HPQ) and Garmin (GRMN) are posting large gains after topping their earnings expectations and providing strong outlooks. DJ30 -77.61 NASDAQ -8.94 SP500 -8.27 NASDAQ Dec/Adv/Vol 1451/775/113 mln NYSE Dec/Adv/Vol 1985/621/73 mln
09:17 am : S&P futures vs fair value: -13.5. Nasdaq futures vs fair value: -11.3.
09:00 am : S&P futures vs fair value: -14.1. Nasdaq futures vs fair value: -14.8. Futures continue to point to a lower start as they trade a few points above their worst levels of the session. The higher than expected inflation reading is fueling a large portion of the negative bias this morning. Crude oil prices have eased $1.25 to $98.45 per barrel, as investors take some profits after yesterday’s record closing price.
08:30 am : S&P futures vs fair value: -13.7. Nasdaq futures vs fair value: -6.5. Futures shed some points on a pair of economic releases, one of which indicates higher than expected inflation. January CPI rose 0.4% month over month, compared to the expected rise of 0.3%. Core CPI rose 0.3% month over month, higher than the consensus estimate of 0.2%. Separately, there were 1012K housing starts in January, and 1048K building permits. Economists expected 1015K starts and 1040K permits.
08:05 am : S&P futures vs fair value: -5.4. Nasdaq futures vs fair value: flat. Stock futures point to a lower open for the S&P 500, and a flat open for the Nasdaq. Weighing on sentiment is reports that KKR Financial Holdings (KFN), the publicly traded credit fund of Kohlberg Kravis Roberts & Co., is delaying its repayment of asset-backed commercial paper debt for the second time. Bloomberg.com reports KKR Financial is involved in restructuring talks with its creditors. A strong earnings and outlook from Hewlett-Packard (HPQ) is helping to lift tech stocks, which is causing the Nasdaq to outperform on a relative basis. Futures may go on the move at 8:30 ET, with the release of January CPI and Housing Starts.
06:21 am : S&P futures vs fair value: -3.7. Nasdaq futures vs fair value: +3.0.
06:20 am : FTSE...5884.20...-82.70...-1.4%. DAX...6912.29...-90.00...-1.3%.
06:20 am : Nikkei...13310.37...-447.54...-3.3%. Hang Seng...23590.58...-532.59...-2.2%.
http://biz.yahoo.com/mu/update.html
4:25 pm : Readers may recall that the stock market flip-flopped on Tuesday, rallying in the early-going and then selling off into the close. On Wednesday it was just the opposite. Stocks languished in the early-going amid concerns about credit market liquidity and a worse-than-expected January CPI report, but eventually turned things around and advanced in the afternoon trade.
The performance was remarkable as there seemed to be some legitimate reasons for participants to assume a bearish view of matters and to maintain that view throughout the session.
News that KKR Financial Holdings, the publicly traded credit fund of Kohlberg Kravis Roberts & Co., had delayed repayment of its asset-backed commercial paper debt for a second time, and was involved in restructuring talks with creditors, sparked concerns about liquidity in the credit market that took a heavy toll on foreign markets.
This news, however, soon took a backseat to the CPI report, which revealed a 0.4% increase in total CPI for January and a 0.3% increase in core-CPI, which excludes food and energy. Both numbers were slightly ahead of expectations that called for increases of 0.3% and 0.2%, yet the year-over-year increases of 4.3% and 2.5%, respectively, are what really grabbed the market's attention.
The initial reaction was understandably negative as the report fueled inflation concerns and suggested the FOMC might not be as aggressive with future rate cuts as had been previously anticipated.
On a related note, the FOMC Minutes from the January 29-30 meeting indicated that members felt inflation expectations would remain reasonably well anchored. Still, it was not lost on the market, which saw oil prices top $100 again in Wednesday's trading, that the Fed raised its core inflation forecast for 2008 to 2.0% to 2.2% from 1.7% to 1.9%. The Fed also cut its 2008 GDP forecast to 1.3% to 2.0% from 1.8% to 2.5%.
The takeaway for the market was that the updated forecasts continue to support the view that further rate cuts remain likely. Accordingly, the stock market pressed higher following the release of the minutes.
In a separate release, it was reported that Housing Starts rose 0.8% in January. That seemingly good news was offset by the realization that starts had dropped 21% over the prior two quarters and that building permits slipped 3.0% to a 16-year low of 1.04 million units on an annualized basis.
After digesting the economic data, the stock market found a bullish stride that was helped along by the outperformance of the financial and technology sectors, which rose 1.6% and 1.7%. At the same time, the lack of follow through selling pressure after the negative open led to some bargain hunting activity that, in turn, forced some short covering that aided in the market's turnaround.
Other leading sectors included energy, which gained 1.5%, and basic materials, which jumped 1.2%.
Dow component Hewlett-Packard (HPQ 47.44, +3.49) provided its fair share of support for the broader market as it got a healthy 8.0% boost following its better than expected fiscal first quarter earnings report and full-year outlook. Its good news trickled down to other tech stocks that resulted in technology being the best-performing sector on the day.
Telecom services remained a drag, however, as it slipped 2.9%. Verizon (VZ 35.24, -0.10) and AT&T (T 34.36, -1.53) led the retreat, having been hit by a Credit Suisse downgrade of both stocks to Neutral from Outperform.
Strikingly, the defensive-oriented sectors consumer staples, health care and utilities underperformed today in a trade that was driven by more growth-oriented issues.DJ30 +90.04 NASDAQ +20.90 NQ100 +1.3% R2K +1.1% SOX +2.7% SP400 +1.4% SP500 +11.25 NASDAQ Dec/Adv/Vol 1249/1696/2.29 bln NYSE Dec/Adv/Vol 1198/1936/1.43 bln
3:30 pm : Stocks retreat off their best levels, but continue to hold onto decent gains as we head into the final half-hour of trade. Gold futures are rallying in electronic trading, now up 1.4%, or $12.90, to $943.00 per ounce.
St. Louis Fed President Poole said the January CPI numbers creeped in the wrong direction, but are not galloping, according to Reuters.DJ30 +70.44 NASDAQ +14.84 SP500 +8.35 NASDAQ Dec/Adv/Vol 1317/1581/1.96 bln NYSE Dec/Adv/Vol 1283/1814/1.19 bln
3:00 pm : Stocks spike to fresh session highs with the major indices posting gains of at least 1.0% for the day. Eight of the ten sectors are in positive territory. Financials (+1.8%) and tech (+1.8%) are neck and neck for the top spot. Only telecom (-2.0%) and healthcare (-0.2%) remain in the red.
The Dow is now up 1.9%, or 232 points, from its session low.DJ30 +124.47 NASDAQ +24.93 SP500 +14.74 NASDAQ Dec/Adv/Vol 1233/1634/1.77 bln NYSE Dec/Adv/Vol 1176/1913/1.07 bln
2:25 pm : Stocks trade in a choppy manner, but remain in the green, following the release of the Jan. 30 minutes, which included the minutes from the emergency Jan. 21 meeting and a Jan. 9 conference call. The Fed lowered its outlook for the economy, while raising its outlook on inflation. Meanwhile, crude has spiked higher, hitting an all-time high of $101.32 per barrel.
In the FOMC Minutes, the Fed said that participants agreed inflation data since the December meeting had been "disappointing", but that slow growth should relieve some of the pressures. The Fed raised its core inflation forecast for 2008 to 2.0% -2.2% from 1.7%-1.9%. The Fed lowered its 2008 GDP forecast to 1.3%-2.0% from 1.8%-2.5% and raised its unemployment rate expectation to 5.2%-5.3% from 4.8%-4.9%.
Fisher dissented as he felt the decision to ease by 75 basis points just one week earlier, which brought the total easing to 175 basis points since September, was enough stimulus in the face of the more than 3% headline inflation. Of note, Fisher did support the emergency 75 basis point cut on Jan. 21. DJ30 +33.78 NASDAQ +8.73 SP500 +4.11 NASDAQ Dec/Adv/Vol 1418/1434/1.62 bln NYSE Dec/Adv/Vol 1501/1582/964 mln
2:00 pm : The major indices climb back toward their session highs, as telecom (-2.7%) attempts to recover. Verizon (VZ 34.98, -0.36) has had a nice bounce off its worst level, when it was down as much as 5.8%. AT&T (T 34.45, -1.44) has also regained some ground, but continues to post a steep decline.
In St. Louis Fed President Poole's prepared speech, he said the "recent relatively small increases in inflation are apparently due to transitory factors and not to changes in inflation expectations." Poole expects "substantial stability of inflation expectation." His view that recent increases in inflation are transitory may help offset some disappointment regarding today's higher than expected CPI reading. However, Poole is retiring and will not attend the next FOMC meeting on March 18, and therefore his comments hold less weight.DJ30 +43.80 NASDAQ +13.44 SP500 +5.61 NASDAQ Dec/Adv/Vol 1324/1513/1.44 bln NYSE Dec/Adv/Vol 1378/1704/837 mln
1:30 pm : In the past half-hour, the major indices climb to fresh highs and then retreat to slightly above the unchanged mark. Financials (+0.9%) and tech (+1.0%) have been battling it out for the leader spot. Meanwhile, telecom (-3.6%) is still posting a steep decline, but is well of its lows when it was down more than 5.5%.
Gold continues to make gains as it hits session highs. Gold is up $5.00 to $934.70 per ounce, its highest level since late January. Commodities as a whole are down a slight 0.1%. DJ30 +16.80 NASDAQ +4.70 SP500 +2.76 NASDAQ Dec/Adv/Vol 1408/1420/1.32 bln NYSE Dec/Adv/Vol 1514/1560/764 mln
1:05 pm : The major indices are off their best levels as they trade slightly above the unchanged mark. Crude oil is hovering around the $100 mark after retreating a bit from its all-time high.
Advancers narrowly outpace decliners on the NYSE and Nasdaq. New 52-week lows outpace new highs by nearly 2-to-1 on the NYSE and by a steeper 15-to-1 on the Nasdaq.DJ30 +7.98 NASDAQ +6.02 SP500 +2.07 NASDAQ Dec/Adv/Vol 1377/1415/1.20 bln NYSE Dec/Adv/Vol 1462/1578/694 mln
12:35 pm : The major indices bounce into positive territory. Five of the ten sectors are now in the green, with notable strength in financials (+1.3%) and tech (+1.3%).
Crude oil spiked into positive territory, hitting a fresh all-time high of $100.40 per barrel. Crude has retreated a bit, trading down 0.1% to $99.87 per barrel. The weekly energy statistics are delayed a day to Thursday, due to the federal holiday on Monday. DJ30 +20.13 NASDAQ +7.83 SP500 +3.20 NASDAQ Dec/Adv/Vol 1336/1427/1.12 bln NYSE Dec/Adv/Vol 1446/1587/646 mln
12:00 pm : The major indices are off their worst levels, but remain in negative territory. The session's bearish bias is being fueled by a higher than expected inflation report.
January CPI rose 0.4% month-over-month, slightly higher than the expected rise of 0.3%. Core CPI, which excludes volatile energy and food prices, rose 0.3%, also topping the consensus estimate that called for a rise of 0.2%.
This leaves CPI up 4.3% year-over-year, and core CPI up 2.5%. Gains were seen in food, energy, medical care costs, PCs and tobacco. The data will spur more inflation concerns. Briefing.com believes that the slow economic growth will help ease inflation, although it is clear this report is negative for the stock market.
In other economic news, January housing starts and building permits were roughly in-line with estimates.
KKR Financial Holdings (KFN 14.16, -0.36), a unit of Kohlberg Kravis Roberts, has delayed repaying its asset-backed commercial paper for the second time. Bloomberg.com reports the firm is in restructuring talks with its creditors. Despite the report, financials (flat) are managing to outperform on a relative basis, thanks to strength in investment banks & brokerages (+1.6%).
Telecom (-5.4%) is again posting a steep decline. Dow components AT&T (T 33.59, -2.30) and Verizon (VZ 33.71, -1.63) are getting clipped after being downgraded to Neutral from Outperform at Credit Suisse. Yesterday, the sector dropped 5% on news that AT&T and Verizon are offering unlimited wireless plans for $99.99. Analysts fear this could be the start of a telecom war that could crimp profits. The companies are the main laggards in the S&P 500.
Helping to offset some selling pressure is a bullish earnings report and outlook from Dow component Hewlett-Packard (HPQ 47.22, +3.27). Its shares are up 7.4% after the company reported earnings of $0.86 per share, excluding items, topping the First Call consensus estimate by $0.05. It also issued upside guidance for the second quarter and the full year. The company noted that 69% of its sales come from outside the United States. It is the best performing stock in the S&P 500 this session. As a result, tech is the best performing sector, with a 0.5% advance.
Retailers (+1.2%) are a standout this session due to positive fourth quarter results from off-price retailer TJX Companies (TJX 31.42, +1.69).
The FOMC minutes for the Jan. 30 meeting are set for release at 2:00 ET. The Fed cut rates by 50 basis points to 3.00% at the meeting; however, Dallas Fed President Richard Fisher dissented, preferring no change. The minutes should help clarify the FOMC's decision and Fisher's decision to dissent. In a Feb. 7 speech, Fisher indicated that inflation concerns spurred his desire to leave rates unchanged.
Crude oil has eased 0.7% to $99.24 after rallying yesterday to a new all-time intraday and closing high.DJ30 -71.56 NASDAQ -9.23 R2K -0.3% SP500 -6.85 NASDAQ Dec/Adv/Vol 1568/1145/880 mln NYSE Dec/Adv/Vol 1855/1134/503 mln
11:30 am : The major indices continue to fluctuate in negative territory, and are currently trading near their best levels of the session. There is some relative strength within financials (+0.3%), which has rebounded into positive territory.
Within the sector, 11 of the 18 groups are trending higher. Investment banks & brokerages (+2.0%) are leading the way, with strength in Goldman Sachs (GS 177.58, +3.78), Bear Stearns (BSC 81.84, +1.82), and Lehman Brothers (LEH 55.32, +1.75).DJ30 -64.32 NASDAQ -6.31 SP500 -5.86 NASDAQ Dec/Adv/Vol 1528/1163/764 mln NYSE Dec/Adv/Vol 1832/1128/433 mln
11:00 am : The major indices remain in the red, with only the tech sector (+0.3%) in positive territory. Energy (-0.1%) is outperforming on a relative basis, despite a 1.1% slide in crude oil prices. Crude is down on some profit-taking, after hitting an all-time intraday high and an all-time closing high yesterday.
Dow component Hewlett-Packard (HPQ 47.07, +3.12) is posting an impressive advance of 7%. The company reported earnings of $0.86 per share, excluding items, topping the First Call consensus estimate by $0.05. It also issued upside guidance for the second quarter and the full year. The company noted that 69% of its sales come from outside the United States. It is the best performing stock in the S&P 500 this sessionDJ30 -74.74 NASDAQ -9.16 SP500 -7.71 NASDAQ Dec/Adv/Vol 1603/1005/624 mln NYSE Dec/Adv/Vol 1963/960/354 mln
10:30 am : The major indices climb off their worst levels and as the major indices trade with modest losses. Strength in retailers and tech (+0.6%) are providing a lift to the broader market.
Retailers (+1.0%) are outperforming the broader market, as they post a decent gain. Their strength this session is being fueled by positive fourth quarter results from TJX Companies (TJX 30.77, +1.04). The off-price apparel retailer reported earnings of $0.64 per share, topping the consensus estimate of $0.63. The company did issue mixed guidance, projecting lower earnings than expected for the current fiscal quarter, but issuing full year guidance above expectations.DJ30 -72.95 NASDAQ -5.30 SP500 -6.96 NASDAQ Dec/Adv/Vol 1559/976/447 mln NYSE Dec/Adv/Vol 1946/894/250 mln
10:00 am : After a failed recovery attempt the major indices fall back toward their opening lows. Nine of the ten sectors are in the red, with only tech (+0.4%) managing to post a modest gain.
Telecom (-4.0%) is again the main laggard. Yesterday the sector shed 5% after Verizon (VZ 33.94, -1.40) and AT&T (T 33.89, -2.00) announced an unlimited wireless plan for $99.99 a month. The stocks are again under pressure this session after being downgraded to Neutral from Outperform at Credit Suisse. DJ30 -81.82 NASDAQ -9.87 SP500 -9.33 NASDAQ Dec/Adv/Vol 1456/930/259 mln NYSE Dec/Adv/Vol 1987/768/153 mln
09:40 am : Stocks open on a low note, fueled by liquidity and inflation concerns.
Regarding inflation, January CPI rose 0.4% month-over-month, higher than the expected reading of 0.3%. Core CPI, which excludes volatile energy and food prices, rose 0.3%, which was also higher than the expected 0.2% rise.
The CPI reading weighed on sentiment, which was already weak due to a delayed repayment of asset-backed commercial paper from KKR Financial Holdings (KFN), a unit of Kohlberg Kravis Roberts & Co. Bloomberg.com reports KKR Financial is involved in restructuring talks with its creditors.
There are some bright spots this morning. Both Hewlett-Packard (HPQ) and Garmin (GRMN) are posting large gains after topping their earnings expectations and providing strong outlooks. DJ30 -77.61 NASDAQ -8.94 SP500 -8.27 NASDAQ Dec/Adv/Vol 1451/775/113 mln NYSE Dec/Adv/Vol 1985/621/73 mln
09:17 am : S&P futures vs fair value: -13.5. Nasdaq futures vs fair value: -11.3.
09:00 am : S&P futures vs fair value: -14.1. Nasdaq futures vs fair value: -14.8. Futures continue to point to a lower start as they trade a few points above their worst levels of the session. The higher than expected inflation reading is fueling a large portion of the negative bias this morning. Crude oil prices have eased $1.25 to $98.45 per barrel, as investors take some profits after yesterday’s record closing price.
08:30 am : S&P futures vs fair value: -13.7. Nasdaq futures vs fair value: -6.5. Futures shed some points on a pair of economic releases, one of which indicates higher than expected inflation. January CPI rose 0.4% month over month, compared to the expected rise of 0.3%. Core CPI rose 0.3% month over month, higher than the consensus estimate of 0.2%. Separately, there were 1012K housing starts in January, and 1048K building permits. Economists expected 1015K starts and 1040K permits.
08:05 am : S&P futures vs fair value: -5.4. Nasdaq futures vs fair value: flat. Stock futures point to a lower open for the S&P 500, and a flat open for the Nasdaq. Weighing on sentiment is reports that KKR Financial Holdings (KFN), the publicly traded credit fund of Kohlberg Kravis Roberts & Co., is delaying its repayment of asset-backed commercial paper debt for the second time. Bloomberg.com reports KKR Financial is involved in restructuring talks with its creditors. A strong earnings and outlook from Hewlett-Packard (HPQ) is helping to lift tech stocks, which is causing the Nasdaq to outperform on a relative basis. Futures may go on the move at 8:30 ET, with the release of January CPI and Housing Starts.
06:21 am : S&P futures vs fair value: -3.7. Nasdaq futures vs fair value: +3.0.
06:20 am : FTSE...5884.20...-82.70...-1.4%. DAX...6912.29...-90.00...-1.3%.
06:20 am : Nikkei...13310.37...-447.54...-3.3%. Hang Seng...23590.58...-532.59...-2.2%.
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